Lamar Pierce, Washington University in St Louis
Lamar Pierce, Washington University in St Louis
The Historical Roots of Firm Access to Finance: Evidence from the African Slave Trade
The Historical Roots of Firm Access to Finance: Evidence from the African Slave Trade
02 Feb 201712:00 PM – 1:30 PM
Faculty and doctoral students only
Location:
Baker Library | Bloomberg Center 102
Organizer:
This paper shows that access to finance is a crucial factor in explaining the link between the historical African slave trade and current GDP. We show that (1) the slave trade is strongly linked to modern firm access to finance, (2) the slave trade is associated with reduced access to both formal and trade credit, (3) these relationships are not explained by reduced demand for credit, but instead by reduced credit supply and unserved credit demand, and (4) while the slave trade is strongly related to access to finance, it cannot explain most other business obstacles, suggesting that long-term shocks to society are exceptionally important for finance.